ITO 26(1)(5), MUMBAI V. HEMANT R. SINGH, MUMBAI

ITA 627/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9862 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 27-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESH
• Assessee Lawyers: SANDEEP N JADHAV LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA NO 627-29/MUM/2017 HEMANT R.SINGH ASSESSMENT YEARS- 2009-10,2010-11 & 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 627,628 & 629/MUM/2017 ( / ASSESSMENT YEARS: 2009-10, 2010-11 & 2011-12) INCOME TAX OFFICER 26(1)(5) ROOM NO.708,C-11 7 TH FLOOR, BKC BANDRA(E) MUMBAI 400 051 / VS. HEMANT R.SINGH 103/1/2, NANBHAI WADI, KORABA MITHAGHAR, WADALA(E) MUMBAI -400 037 ./ ./PAN/GIR NO. BCXPS-1885-F ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) ASSESSEE BY : SANDEEP N.JADHAV, LD. AR REVENUE BY : SAURABH DESHPANDE, LD. DR / DATE OF HEARING : 22/08/2017 / DATE OF PRONOUNCEMENT : 06/09/2017 ITA NO 627-29/MUM/2017 HEMANT R.SINGH ASSESSMENT YEARS- 2009-10,2010-11 & 2011-12 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THESE ARE THREE APPEALS BY REVENUE FOR ASSESSME NT YEARS [AY] 2009-10, 2010-11 & 2011-12 WHICH ASSAILS THE SEPARA TE ORDERS OF FIRST APPELLATE AUTHORITY. SINCE COMMON ISSUE OF BOGUS PURCHASES IS INVOLVED IN ALL THE APPEALS, WE DISPOSE-OFF THE SAME BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE & BREVITY. FIRST, WE TA KE UP ITA NO. 627/MUM/2017 FOR AY 2009-10 WHICH CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-38 [CIT(A)], M UMBAI DATED 11/10/2016 QUA RELIEF PROVIDED TO THE ASSESSEE AGAINST CERTAIN BOGUS PURCHASES. 2.1 BRIEFLY STATED THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED IN TRADING OF IRON & STEEL UNDER PROPRIETORSHIP CONCERN NAMELY UTKARSH STEEL CORPORATION, WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 24/03/2014 AT RS.2,32,75,090 /- AFTER ADDITION OF BOGUS PURCHASES OF RS.2,27,36,049/- U/S 69C. THE ORIGINAL RETURN WAS FILED AT RS.5,39,045/- ON 28/09/2009, WH ICH WAS PROCESSED U/S 143(1). 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN ISSUANCE OF BOGUS PURCHASES BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS. 2,27,36,049/- FROM SIX PARTIES. CONSEQU ENTLY, NOTICE U/S 148 ITA NO 627-29/MUM/2017 HEMANT R.SINGH ASSESSMENT YEARS- 2009-10,2010-11 & 2011-12 3 DATED 12/02/2013 WAS ISSUED WHICH WAS FOLLOWED BY S TATUTORY NOTICES U/S 142(1)/143(2). 2.3 TO SUBSTANTIATE THE PURCHASES TRANSACTIONS, THE ASSESSEE WAS ASKED TO SUBMIT THE NECESSARY DOCUMENTARY EVIDENCES WHO, IN TURN, CONTENDED THAT THE PURCHASES WERE GENUINE SINCE COR RESPONDING SALES WERE MADE BY THE ASSESSEE. HOWEVER, NOT CONVINCED, LD. AO NOTED THAT THE ASSESSEE COULD NOT PROVE ACTUAL DELIVERY OF MAT ERIAL AND THEREFORE, TREATED THE SAME AS NON-GENUINE PURCHASES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE U/S 69C. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD.CIT(A) VIDE IMPUGNED ORDER DATED 11/10/20 16 WHERE LD. CIT(A) NOTED THAT NOTICES SENT U/S 133(6) TO ALLEGED BOGUS SUPPLIERS RETURNED BACK UNDELIVERED AND THE ASSESSEE COULD NO T PRODUCE ANY OF THE PARTIES TO CONFIRM THE TRANSACTIONS. HOWEVER, L D. CIT(A) ALSO NOTED THAT BY MAKING THE IMPUGNED ADDITIONS, THE GP RATE REFLECTED BY THE ASSESSEE WOULD SHOW ABNORMAL INCREASE, WHICH WAS NO T POSSIBLE IN ASSESSEES BUSINESS. FINALLY, PLACING RELIANCE ON S EVERAL JUDICIAL PRONOUNCEMENTS, LD.CIT(A), TO COVER LEAKAGE OF REVE NUE, RESTRICTED THE IMPUGNED ADDITIONS TO 6% OF BOGUS PURCHASES, AGAINS T WHICH THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] DREW OU R ATTENTION TO THE FACT THAT NOTICES U/S 133(6) SENT TO THE SUPPLI ERS WERE RETURNED BACK UNCLAIMED AND THE ASSESSEE COULD NOT ESTABLISH DELI VERY OF MATERIAL BEFORE LD. AO AND THEREFORE, THE ADDITIONS WERE JUS TIFIED. IT WAS FURTHER CONTENDED THAT THE ONUS TO SUBSTANTIATE THE PURCHAS ES SQUARELY LIED ON THE ASSESSEE AND MERE PAYMENT THROUGH BANKING CHANN ELS WAS NOT ITA NO 627-29/MUM/2017 HEMANT R.SINGH ASSESSMENT YEARS- 2009-10,2010-11 & 2011-12 4 SUFFICIENT TO PROVE THE SAME SINCE NO CONFIRMATIONS ETC. WAS FILED BY THE ASSESSEE BEFORE LOWER AUTHORITIES AND NONE OF THE P ARTIES COULD BE PRODUCED FOR CONFIRMATION OF PURCHASES. 5. PER CONTRA, LD. REPRESENTATIVE FOR ASSESSEE [AR] PLACING RELIAN CE ON THE ORDER OF LD. CIT(A), DREW OUT ATTENTION TO T HE FACT THAT THE ASSESSEE, TO MAKE UP FOR THE DOCUMENTARY SHORTCOMIN GS, ACCEPTED THE VERDICT OF LD. CIT(A) WHICH WAS FAIR AND REASONABLE . 6. HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITHOUT PURCHASES. THE SALES TURNOVER ACHIEVED BY T HE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE AND THE PAYMENTS W ERE THROUGH BANKING CHANNELS. ON THE OTHER HAND, THE ASSESSEE C OULD NOT PRODUCE CONFIRMATIONS FROM THE ALLEGED BOGUS SUPPLIERS AND FURTHER NOTICES SENT U/S 133(6) WERE RETURNED BACK UNDELIVERED IN ALL TH E CASES. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE , WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTI ONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES, WHICH LD.CIT(A) HAS RIGHTLY DONE. THE LD. CIT(A) AF TER APPRECIATING THE GP / NP RATES FOR SEVERAL YEARS ESTIMATED THE IMPUGNED ADDITION @ 6%, WHICH, KEEPING IN VIEW THE NATURE OF ASSESSEES BUS INESS, ARE QUITE FAIR AND REASONABLE AND HENCE DO NOT REQUIRE ANY INTERFE RENCE ON OUR PART. THEREFORE, THE REVENUES APPEAL STANDS DISMISSED. 7. THE ASSESSEE HAS SUFFERED SIMILAR ADDITIONS OF R S.2,22,33,675/- & RS.1,33,83,283/- IN AY 2010-11 & 2011-12 RESPECTIVE LY IN THE QUANTUM ASSESSMENTS, WHICH HAS BEEN RESTRICTED TO 6% BY THE FIRST APPELLATE ITA NO 627-29/MUM/2017 HEMANT R.SINGH ASSESSMENT YEARS- 2009-10,2010-11 & 2011-12 5 AUTHORITY, AGAINST WHICH REVENUE IS IN FURTHER APPE AL BEFORE US. SINCE, WE HAVE ALREADY UPHELD THE ORDER OF LD.CIT(A) IN AY 20 09-10 ON SIMILAR FACTS AND CIRCUMSTANCES, TAKING THE SAME STAND, WE DISMISS THE REVENUES APPEALS FOR AY 2010-11 & 2011-12. 8. RESULTANTLY, ALL HE APPEALS FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH SEPTEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 06. 09.2017 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. #&. , . , / DR, ITAT, MUMBAI 6. / / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI